Having specialized in family business succession planning for more than 30 years now, I’ve come to learn that many business owners are confused by most of the information that is currently available. It seems to provide them with more questions than answers.

Here’s what I mean. When they go searching online, they are typically looking for answers to questions like, “What’s the best way to transfer business ownership to other family members?”.

What they encounter are questions they haven’t necessarily thought about before:

  • Will you have enough money for retirement?
  • Have you provided enough security for your family?
  • How can you move your assets to the next generation without losing control?
  • Have you taken timely steps to avoid paying too much tax?
  • What steps have you taken to ensure family harmony?

The problem for these business owners is that they are thinking of succession as a destination rather than a journey – they are thinking exit strategy, instead of succession strategy.

I’m not saying that the destination isn’t important. The starting point for succession planning should definitely be with the desired destination in mind. But many questions, like the one’s above, need to be answered before you can see your way clear and determine the best route to take.

It’s like taking a road trip. You know where you want to end up, but there are so many different routes you could take to get there. Which one you ultimately choose might depend on answers to questions like:

  • Which route avoids construction delays?
  • Which route provides the best accommodations and dining alternatives?
  • Which route is the most scenic?

Before you head out to your destination, you first have to answer these questions to plan your journey.

How Long Does the Succession Planning Journey Take?

We typically want to start a client relationship with a business owner five to ten years before he or she is thinking about passing along ownership to the next generation or selling to others. That gives us time to plan for contingencies to protect their assets and mitigate risks, ensure sufficient income levels for retirement, and take advantage of strategies to minimize taxation upon both the sale of the business and upon settlement of their estate.

So, if you want to maximize wealth creation and minimize taxation upon exiting your business, start thinking now about the “journey”, not the “destination”.